Bank's Policies Create Poverty, Stifle Jobs

By Gumisai Mutume, IPS13 January 1999

JOHANNESBURG, Jan 13 (IPS) - Employment creation should be at
the centre of any successful poverty alleviation programme, says
a World Bank economist, but South African analysts argue that
the Bank's own policies have done little to stimulate employment
in Africa.

"Employment has to be at the centre," says Joseph Stiglitz,
chief economist of the World Bank when he addressed a three-day
Inter Faith/World Bank poverty conference which began in
Johannesburg on Tuesday. "It is absolutely important and it is
often forgotten as a key message."

The conference's findings will be incorporated in the UN's
forthcoming World Development Report.

Stiglitz says in the past, poverty alleviation strategies
focused mainly on economic growth and employment creation was
less emphasised.

There is now a need to add new measures of poverty, such as
mobility in income positions in a country, measures of
opportunity, such as access to education, and measures of risk,
how often and how easy it is for a family to fall below or above
the poverty line, Stiglitz adds.

Over the years, the World Bank has made several prescriptions
for the alleviation of poverty, the most widely implemented
being Structural Adjustment Programmes (SAPS) in developing
countries. But there have been little returns.

"Many of the opinions of the World Bank are the old ones,"
says ruling African National Congress (ANC) parliamentarian and
economic thinker Ben Turok. "There is no one message."

"In many countries in Africa, the stabilisation programme
has worsened the situation and brought greater poverty without
creating jobs," Turok told IPS.

South Africa's government is saddled with the problem of 50
percent of the population living below the poverty line. The
country has been a faithful disciple of World Bank-led macro-
economic policies, clipping its budget deficit from 10.2 percent
of Gross Domestic Product (GDP) in 1993/94 to the current 3.5
percent. With further discipline, it aims to bring it down to
three percent.

Under the Growth, Employment and Redistribution (GEAR)
strategy, a pseudo structural adjustment programme, government
aims to achieve growth rates of six percent per annum and to
churn out 600,000 jobs annually by the year 2002.

Turok recommends a strategy that couples such stabilisation
with targetted infrastructural spending and investment.

South Africa's unemployment rate has grown from 17 percent in
1995 to 23 percent last year, according to 'Statistics South
Africa'. Independent analysts put it as high as 50 percent among
the majority Black population.

The country's economy, on the other hand, has not been
growing handsomely. It is expected to improve by half a
percentage point in 1999, hardly anything to savour given a
population growth rate of above 2.5 percent.

Talk of poverty alleviation without talk of debt cancellation
is meaningless, says the Anglican Archbishop of Cape Town
Njongonkulu Ndungane.

"One of the contributing factors to poverty is the
astronomical debt that is owed to developed countries by
developing countries," says Ndungane, who is championing debt-
forgiveness.

"The cancellation of these unpayable debts will go a long
way towards improving the quality of life and restoring dignity
in developing countries," he adds.

"A first step would be for the Group of Eight (G8) countries
and financial institutions, when they meet in June in the German
city of Cologne, to make an unequivocal commitment of intent to
cancel the developing world's unpayable debts."

Another factor that has been identified as a key contributor
to growing world poverty is globalisation.

While it has positive aspects, such as new information
technologies, deregulation in money markets and a significant
growth in global trade, it also has hit national economies
through the whim of multi-national decision makers and
international capital.

Government's no longer wield power and real power is now in
the hands of those who have money -- the multinationals who
shift intensive employment around the globe to where wages are
lowest.

Worldwide, according to UN statistics, 1.3 billion people
live in extreme poverty(on less than one U.S. dollar a day), and
about 70 percent of them are women. By 2020, the number of
malnourished children is set to grow to 200 million from 193
million and most of them will be in Africa.

Increasingly, however, there have been important voices,
including that of the World Bank, conceding the flaws of the
present free market ideology.

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